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Delivery Service, Central Indiana
C&C Delivery Service
EMAIL: ccdeliveryservice@yahoo.com Office Telephone: 317-956-3108 or Telephone: 317-993-9185
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True Cost of Home Delivery - Pt I of II
By Kevin Truett
While retailers know quite a bit about how the activities on their floor affect sales (how many ups, closing rates, average sale, etc.), many retailers, when asked, are unaware of what they actually spend on deliveries each year. If you're one of the few retailers still offering in-house deliveries, it's important to understand what your true cost is.
Every home furnishings retailer wants to improve their bottom line and increase profitability, however, there's a significant hole in your wallet that's eating up your profits with each and every delivery. In all cases, your cost to deliver goes well beyond a tank of gas and the hourly wage of a couple employees.
To begin, you must identify and control your costs in three major areas as it relates to your deliveries; Labor Costs, Operational Costs and Vehicle Costs.
Labor Costs
When considering labor costs, many retailers fail to calculate the underside of the iceberg. If a single delivery takes one hour round trip and requires two of your employees at $12.00 per hour, you just see the tip of the iceberg. However, the underside of the iceberg reveals your direct labor costs which include; FICA, unemployment, health and welfare, vacations, turnover and workmen's comp insurance.
Take a look at one example of the direct cost for a typical employee:
Wage $12 / hr
Workmen's comp $0.65 (6.5 %)
Pension plan $1.00 ($1.00 / hour)
Med/Social Security $0.77 (7.65%)
Personal / Sick time $0.20 (five days)
Holiday time $0.20 (five paid holidays)
Vacation time $0.40 (two week vacation)
Health insurance $3.34 (monthly cost of $550.00)
Total direct cost for this employee is $18.56 per hour, based on the above examples. With this common scenario, a one hour delivery now has a direct cost of over $35 in labor expense but doesn't stop there. In the case of unexpected absenteeism, there is also the great expense of acquiring temp labor and providing them proper training. Often, retailers overlook the hours their management spends simply managing the entire delivery process and fail to attribute that portion of their salary to delivery cost.
Operational Costs
If you're like most retailers, you've kept good records to track your operational cost over the course of a year. But even some of the strongest retailers that keep the best of records fail to tie some of their operational costs to their very source-home deliveries.
Don't make the common mistake of chalking up these operational costs to the cost of doing business. These are the costs directly associated with home deliveries: routing, service issues, discounts, property damage, product damage and adequate equipment such as dollies, pads, straps, uniforms, etc.
Even route optimization is critical in improving efficiency to lower delivery cost. Whether you route your deliveries yourself or utilize specialized logistics software, routing requires both skill and time, both of which come with a price.
Also overlooked are service issues and how expensive they are to resolve. From missing product to damaged product, studies show that your typical exchange can cost up to 5x the original delivery cost and all too often, these costs exceed the margin or even the total cost of the item. In addition, there are costs associated with unnecessary customer agitation, future lost business, and negative word of mouth advertising.
And of course, we can't ignore the customer's floor we just scratched or the smudge mark on your customer's brand new mattress they just purchased. In Furniture World Magazine over 400 of their readers participated in an online survey that showed 62% of those surveyed stated that damage was their number one delivery issue. I'm sure your delivery crew does their very best to make every delivery incident free, but should an unfortunate accident take place, this cost adds up and over the course of time should be averaged out and considered part of your direct delivery cost.
Vehicle Costs
Years ago, I purchased my first Mercedes Benz and got an incredible deal. After performing much research, taking test drive after test drive and comparing prices at every lot, finally I was the proud owner of the car I had always wanted. Three months later, I wasn't so sure I wanted it. I spent $4,000 on repairs to the automatic air ride system and $349 on my first oil change.
Today, the U.S. Energy Information Administration is pricing diesel at $2.90 per gallon. That's $.36 higher than this time last year. That rarely goes unnoticed and most of us like to think we pay close attention to every detail. But even after all the research and comparison shopping I did before purchasing my Mercedes, I failed to consider the true cost of even a simple oil change. Now I know, you're probably not running a fleet of Mercedes, but there are always other delivery vehicle expenses that should be considered part of your direct cost, such as insurance, registration, maintenance, repairs and even depreciation.
Of course, insurance and registration requirements never go away and depreciation is one of the most overlooked vehicle expenses. Like I did with my Mercedes, failing to take even the smallest details into account can cause you to overlook the true costs of your vehicle.
So what's the solution?
It could very well be hiring a third party delivery management company.
Kevin Truett
Director of Business Development
Speedy Delivery LLC
Kevin is one of the original executive managers for Speedy Delivery LLC. He currently serves as the director of Business Development. He is also a scheduled seminar speaker at the world renowned Market in Las Vegas, NV and has been published in the wide spread Western Retailer. Prior to joining the team at Speedy, he ran his own consulting firm serving Wells Fargo Bank for nearly 6 years. Kevin is also the founding pastor of two Christian churches that continue to grow in Iowa and Oregon. Outside of work, Kevin enjoys being with his wife of 14 years and three children. He also enjoys golfing, fishing and helping others become great leaders.
Speedy Delivery is a delivery management company founded in 2000 and based out of Richland, Washington serving all of Washington State, Oregon and parts of Idaho. Together, the executive team at Speedy brings over 50 years of industry experience. You'll find us each year at the Market in Las Vegas, NV as well as the WHFA Conference.
Speedy Delivery: http://www.speedydeliveryllc.com
For more information, you can email the author at: kevin@speedydeliveryllc.com
Article Source: http://EzineArticles.com/?expert=Kevin_Truett
http://EzineArticles.com/?True-Cost-of-Home-Delivery---Pt-I-of-II&id=4773700
True Cost of Home Delivery - Part II of II
By Kevin Truett
In Part I of this article, we identified the three expense groups that make up our direct costs for home deliveries. We looked at our Labor Cost, Operational Cost and our Vehicle Cost. We often see home furnishings retailers make the mistake of thinking their only cost to delivery merchandise to the customer's home is the gas and an hourly wage of one or two guys. This couldn't be farther from the truth. In order to improve our bottom line and increase profitability, it is critical that we address the direct costs listed in Part I and possibly eliminate some of those direct costs if at all possible.
So what's the solution?
Now that we've taken a closer look at our true delivery cost, it's easy to understand why so many retailers are now contracting their deliveries to a third party delivery company. As seen in dozens of articles at furninfo.com, many retailers are finding that contracting their deliveries to a third party delivery company allows them to better control their costs, minimize their liabilities and offer superior customer service throughout the entire customer's experience.
What happens to your Labor Cost?
When contracting out your deliveries, your labor dollars are allocated to the specific needs or your store and your employees can now focus on productivity and sales. Many third party delivery companies will even promote your brand and do an excellent job representing your store; however you aren't liable to pay their wages, taxes or benefits. Employee absenteeism will no longer affect you. And don't worry about vacation pay, sick pay or holiday pay; you're not going to pay for that either.
What about Operational Cost?
Professional delivery companies are experts at what they do. They are trained to carefully carry out each delivery with the utmost care, keeping your product in perfect shape. They employ the latest in route optimization keeping your deliveries efficient while saving you valuable time and resources. Once your product is on the truck, the liability then falls on the carrier. A smudge, a rip or any other damage found by the customer is now repaired or replaced by your delivery company, saving you thousands in operational expenses and any potential repairs to damaged property.
What about Vehicle Cost?
Most top rated delivery companies operate late model vehicles that reflect the standard of excellence their clients require. Imagine how nice it would be if you didn't have to worry about insurance, registration, DOT requirements or breakdowns. When utilizing a third party delivery company, those liabilities fall on them and in the case of any breakdowns, they provide a replacement vehicle immediately at no cost to you. Retailers that outsource their deliveries enjoy worry free vehicles they can count on, they never having to purchase another vehicle again, or worry about their depreciation. Your third party delivery company is taking care of the delivery trucks that service you all year long, but you're only paying for deliveries when you need them.
So, when calculating the true cost of your deliveries don't just look at the tip of the iceberg, but also your costs that float just below the surface and often times out of sight. The true cost of home delivery consumes your time and includes unnecessary headaches. Remember the cost of a simple oil change and don't let the cost of small details slip away from you. Consider hiring a third party delivery company and leave deliveries to the delivery experts so your employees can focus on what they do best-sell furniture!
Kevin Truett
Director of Business Development
Speedy Delivery LLC
Speedy Delivery is a delivery management company founded in 2000 and based out of Richland, Washington serving all of Washington State, Oregon and parts of Idaho. Together, the executive team at Speedy brings over 50 years of industry experience. You'll find us each year at the Market in Las Vegas, NV as well as the WHFA Conference.
Speedy Delivery: http://www.speedydeliveryllc.com/
For more information, you can email the author at: kevin@speedydeliveryllc.com
Article Source: http://EzineArticles.com/?expert=Kevin_Truett
http://EzineArticles.com/?True-Cost-of-Home-Delivery---Part-II-of-II&id=4773875
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